Shareholders give nod to new Corona Corp.

If there was any doubt the amalgamation of five Royex group companies into one big corporate entity to be known as Corona Corp. would not go ahead, Chairman Ned Goodman dispelled it early.

Addressing shareholders of the five TSE-listed firms — Royex Gold Mining, International Corona Resources, Lacana Mining, Mascot Gold Mines and Galveston Resources — at a downtown Toronto cinema, Goodman explained at the start that management controlled a sufficient amount of proxies to approve the amalgamation.

The meeting (it was over in less than 90 minutes) was called to create the new Corona, which in terms of gold output will rank third in Canada and fifth in North America. It took place at a Cineplex Odeon cinema, one of the new company’s directors, Myron Gottlieb, being vice-chairman of the theatre chain. The five shareholder meetings were run concurrently in the largest auditorium of the multi- theatre complex, with a video transmission of the proceedings available in a smaller room for those who couldn’t find seats in the main auditorium.

Holders of about 97.5% of Royex, 95.7% of International Corona, 98.7% of Lacana, 98.5% of Mascot and 99.8% of Galveston voting shares represented at the meeting voted in favor of the amalgamation. After deducting the votes attached to shares held by management and shares held by the companies in each other, the amalgamation was also supported by the majority of minority shareholders.

The new company will come into existence July 1, with trading on stock exchanges expected to begin July 4 (the first trading day after the holiday weekend). Gold production

New Corona will produce a projected 465,000 oz gold for the current fiscal year ending Sept 30, and 650,000 oz for fiscal 1989. New Corona will have interests in eight operating mines and four mines under development as well as several exploration properties. It will also have oil and gas and industrial mineral interests. Projected average production cost for the new company is $170(US) per oz gold.

The above production estimates include Corona’s 50% of the output from the Williams mine at Hemlo, ownership of which is the subject of a legal dispute between International Corona and Lac Minerals (TSE). A final ruling in the dispute is to be made by the Supreme Court of Canada; a hearing by that court has been set for Oct 11.

(Should Corona become the legal owner of the Williams mine, its joint-venture partner would be TSE-listed Teck Corp., which operates the adjacent David Bell mine at Hemlo in a 50/50 partnership with Corona.) Corporate structure

“Corona Corp. will have an easier to understand structure, greater operating and administrative efficiencies and the shares will have considerable liquidity,” said Peter Steen, president of the new company. The five companies share common management and are operated from the same offices in downtown Toronto.

Steen said new Corona’s share of production from its mines (including the Williams) totalled 220,000 oz gold during the first six months of fiscal 1988.

Two gold projects expected to go into production this year are the Jolu in Saskatchewan (December startup) and the Santa Fe in Nevada (October startup).

Opposition to the amalgamation was voiced by one Mascot shareholder, who was concerned about a reduction in voting privileges in the new company. Mascot operates the Nickel Plate gold mine in British Columbia.

While Royex and Lacana are registered in Ontario, the other three companies were not, Mascot and Galveston having British Columbia registrations and International Corona a federal registration. Shareholders voted to approve the continuation of Mascot, Galveston and International Corona under the Ontario Business Corporations Act.

Capital of Corona Corp. will consist of class A subordinate voting shares, class B common shares and a series of preferred shares. Each A share will carry one vote, each B share 100 votes. The new company is expected to have 116.3 million A shares and 8.7 million B common shares outstanding. Voting control

About 55.6% of the votes of Corona Corp. will be controlled, directly or indirectly, by the management group which controls the Royex group: Goodman, Gottlieb, Paul Carroll and Timothy Hoare, all directors of Royex group companies, and 12 senior officers or employees.

The management group has agreed that if a member wishes to sell his Corona Corp. B shares, they will be first offered to other members. If those shares are not purchased by others in the group, the B shares will be converted into A shares and offered in the market.

Corona Corp. will not issue any additional B shares from treasury — other than those involved in the amalgamation and existing B warrants and options and for stock dividends — without the consent of the A shareholders.

Also, one-third of Corona Corp.’s board will have an arm’s length relationship with management.

Sitting on the new Corona’s 15- member board of directors will be Goodman, Steen, Gottlieb, Carroll, Hoare, M. Norman Anderson, Peter Brown, William Eplett, John Ivany, John McMillan, Lawrence Page, Murray Pezim, Lord Shaughnessy, K. Barry Sparks and William Treblicock.

Presented with an oil painting depicting the three producing mines at the Hemlo camp (Hemlo Gold’s Golden Giant is the third mine) was Pezim, who played a significant role in International Corona’s early years.